March 3, 2015 / 5:33 PM / in 4 years

U.S. Chamber to propose recommendations for SEC enforcement policies

WASHINGTON, March 3 (Reuters) - The U.S. Chamber of Commerce plans this spring to release a report recommending steps it believes U.S. securities regulators should follow when they investigate public companies, it said on Tuesday.

Chamber officials said the report was inspired by some of its member companies who are uncertain about how to navigate the investigative process.

The report comes at a time when enforcement has risen to become a major priority at the Securities and Exchange Commission.

SEC Chair Mary Jo White, a former federal prosecutor, has sought to toughen the program, but some of the new enforcement policy initiatives she has pushed have upset defense lawyers.

The Chamber announced the report on a press call about its 2015 regulatory agenda, just two days before Andrew Ceresney, the SEC’s top enforcement chief, is slated to testify before a congressional panel about the agency’s enforcement program.

Since joining the agency in 2013, White and Ceresney have required some defendants to admit to wrongdoing, rather than letting them settle without admitting or denying the charges.

The division has also stepped up its use of in-house trials, instead of filing the same charges in a federal court.

The Dodd-Frank law gave the SEC the power to seek penalties against a wider array of defendants through its in-house administrative trials.

Defense lawyers say such trials put their clients at a disadvantage. There is no jury, the trials are expedited and there is typically very limited discovery.

David Hirschmann, president of the Chamber’s Center for Capital Markets Competitiveness, did not say whether the report will delve into the use of in-house trials.

However, he said, the report was inspired by feedback from non-financial public companies that said they were having a tough time navigating the SEC’s investigative process.

“When the SEC began to investigate them, one of the things that surprised them was that there was no rule book for them on how to handle it,” Hirschmann said. “They didn’t know whether they were supposed to immediately disclose that to their shareholders.”

One company, for example, had to wait 18 months to update its board after it responded to an SEC inquiry.

To date, Chamber officials said they had interviewed roughly 300 people to get input for the report’s recommendations, including more than 100 who have worked on SEC enforcement matters.

This will be the Chamber’s third report since 2009 that lays out various proposed changes to SEC procedures. (Reporting by Sarah N. Lynch; Editing by Lisa Von Ahn)

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